Voters to decide on Abbott’s budget cuts

Treasurer Joe Hockey said on Wednesday other federal government agencies, including the Australian Competition and Consumer Commission, are operating at a “technical loss” and may need help. Photo: Alex Ellinghausen

Phillip Coorey Chief political correspondent

The Abbott government intends to include controversial recommendations from its Audit Commission in its first budget and avoid breaking its election commitments by promising to implement them after the next election.

The government’s first budget, due in May, will map a path to surplus that will require spending cuts not put to voters at this year’s election.

Senior sources said any new policy measures would be placed towards the end of the four-year, 2014-15 budget cycle, which ends in 2017-18, enabling Tony Abbott to seek a mandate for them at the next election, due in 2016.

“We are not going to implement any measures inconsistent with our election promises,” said a senior source.

“But there’s scope to take reforms and policies to the subsequent election.

“The next budget takes us beyond the next election which gives people an opportunity to assess our [surplus] plan and whether they’re happy to come with us.”

In doing so, Mr Hockey warned that other federal government agencies were operating at a “technical loss” and may need help. These include the Australian Competition and Consumer Commission, which could be about to have its workload increased monitoring the repeal of the carbon price.

The commission will be headed by Business Council of Australia president Tony Shepherd, prompting Opposition Leader Bill Shorten to accuse the government of outsourcing policymaking “to big-business lobby groups”.

“Not content with just doing the ­bidding of big business, now they’ve simply outsourced policy development,” he said.

“These are the business groups who have publicly called for an increase in the GST, reducing penalty rates and the minimum wage.

Tax increases ruled out

“Who is representing the people that will be hit by the commission’s cuts – the pensioners, families with kids in school, people who need to visit a ­hospital?”

The government has ruled out net spending cuts to health and education and, on Wednesday, Mr Abbott ruled out tax increases, even if they were ­recommended.

“It’s almost inconceivable that the Commission of Audit would be going down that path,” he said, but he added there was no way to return the budget to surplus without doing “some things people don’t like”.

While the terms of reference include recommending the privatisation of remaining federal government assets, Mr Abbott said other than Medibank Private, nothing else would be sold in the first term because he had no ­mandate. Selling Medibank has been long-standing Coalition policy.

“That’s not to say that nothing apart from Medibank Private will ever, ever be sold but we won’t do anything that is inconsistent with our mandate,” he said.

Mr Abbott emphasised that Medibank would not be sold at any price.

Scoping study

“There will be a scoping study because we would want to sell it at the right time, not the wrong time, so we maximise the price and get the best possible value for taxpayers,” he said.

Opposition health spokeswoman Catherine King said selling the fund would cause premiums to rise, ­concerns echoed by Australian Medical Association President Steve Hambleton.

Mr Hockey played down the impact of asset sales on repaying debt and ­deficit, saying their contribution would be minimal.

“There is not a lot of money left in privatisation at a federal level that is going to work to pay off the debt,” he said.

“The only way you can start to pay off the debt in any meaningful way is to grow the economy to improve the state of the budget, to run surpluses, year after year budget surpluses, which at the end of the day go to pay down the debt. There is no Telstra, there is no Commonwealth Bank.”

One source said the Mid-Year ­Economic and Fiscal Outlook, to be released before Christmas, would be the last time the Coalition would blame the previous government for the state of the economy.

“That will be the line in the sand on Labor,” he said.

The May budget and its surplus plan would be the Coalition’s document.

Treat audit seriously

“After MYEFO, it’s all ours,” he said.

Max Moore-Wilton, the head of the Department of Prime Minister and Cabinet when John Howard was first in power, urged the audit be treated seriously. He said Henry tax review commissioned by the Rudd government “was very badly treated”.

“So I think it’s very important for public administration that these reports are taken seriously,” he said. “Ministers and their personal staffs do not have the capacity to take the detailed assessments which are necessary on these very big projects for the future and the management of the economy.”

On Thursday, the government plans to release the draft legislation to repeal the Minerals Resources Rent Tax, a decision that has already been factored in by the Coalition to cost the budget $4.4 billion in forecast revenue over the next four years.

At the same time, the government will step up the pressure on Labor to repeal the carbon tax.

Environment Minister Greg Hunt will publish a quarterly update of Australia’s National Greenhouse Gas Inventory showing emissions for the year ended March, 2013, were steady at 557 million tonnes.

He will argue the carbon tax was imposing a multi-billion-dollar hit on the economy without reducing ­emissions.